Adding to this site’s archived caselaw addressing disbursements in injury litigation, reasons for judgement were released last week by the BC Supreme Court, New Westminster Registry, addressing the reasonableness of a variety of disbursements in the prosecution of an ICBC Claim.
In last week’s case (Kezel v. Greenslade) the Plaintiff was involved in two collisions in July 2007. She sued for damages and in the course of the lawsuit accepted an ICBC formal settlement offer for $46,000 plus costs and disbursements. The parties agreed to reasonable costs but a variety of disbursements were challenged. The judgement is worth reviewing for the Court’s discussion of the following disbursements:
1. Medico-legal reports from multiple experts
2. A Functional Capacity Evaluation
3. A Defence Medical Exam Cancellation Fee
4. Outside Legal Fees
5. Mediation Administration Fees
6. Photocopy Charges
7. Legal Alternative Courier Charges
8. Office Supplies
Reasons for judgement were released last week by the BC Supreme Court, New Westminster Registry, discussing the propriety of lawyers lending money to clients in the context of a personal injury lawsuit.
In last week’s case (March v. Stanley T. Cope, Personal Law Corporation) the Client was injured in a 2007 motor vehicle collision. She retained a lawyer to represent her. In the course of the lawsuit, in addition to funding disbursements, the lawyer provided the client “two $5,000 advances” and charged interest on these loans at 18%.
The Client eventually discharged the lawyer and hired new counsel. The case then settled. A dispute arose as to how much the former lawyer was entitled to. The client argued the 18% rate of interest “should be reduced from the contractual rate to a much lower figure of 4 percent“. District Registrar Cameron ultimately allowed the rate of interest as charged but provided the following words of caution addressing lawyer/client loans:
[36]I do wish to make some observations respecting the two $5,000 advances. While I have accepted that Ms. March agreed to pay interest on these sums and was reminded of her agreement in the periodic billing she received from Mr. Cope, I am not persuaded that the contingency fee agreement contemplates such advances.
[37]It behooves a solicitor to clearly and carefully document any financial matters between himself and his or her client. If a client is to obtain an advance from a lawyer, he or she should receive a letter from the lawyer setting out the agreement, documenting all of the relevant terms and setting out the reasons for the advance. The client should also be given the opportunity and urged to obtain legal advice before concluding the agreement to borrow money from her lawyer.
[38]This should all be done to guard against the lawyer taking what would be an inappropriate personal interest in the litigation thereby putting at risk his or her obligation to provide the client with objective advice and undivided loyalty.
[39]In this case, I am satisfied that Ms. March did not suffer any detriment from the absence of clear documentation for these two loans but that may not always be the case. Accordingly, I will allow Mr. Cope the interest claimed on the two advances in keeping with his oral agreement with Ms. March.
Update – May 17, 2013 – the below decision was upheld on appeal this week. You can click here to read about this development
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A developing area in BC relating to personal injury law is the ability of a Plaintiff to recover interest charged on disbursements. Prosecuting personal injury claims, particularly claims with complex injuries, can be an expensive business. Disbursements can quickly add up to tens of thousands of dollars. These expenses are often financed through a line of credit which can accrue significant interest over time. Although the BC Court of Appeal has yet to weigh in on this subject, it appears the law is shifting to allow interest on disbursements to be recovered in personal injury litigation in this Province. Reasons for judgement were released today by the BC Supreme Court, Vancouver Registry, allowing such a result.
In today’s case (Chandi v. Atwell) the infant Plaintiff was severely injured in a 2004 collision. The case settled for $900,000 plus costs and disbursements. Following settlement ICBC took issue with many of the Plaintiff’s disbursements. The parties had these assessed by the BC Supreme Court. While some reductions were made the Court ultimately upheld many of the Plaintiff’s disbursements including a medico-legal assessment which alone cost almost $17,000.
The Plaintiff incurred over $25,000 in disbursement interest. In allowing this expense the Court provided a useful summary of the law at paragraph 71 of the reasons for judgement with District Registrar Cameron coming to the following conclusion: [73] While the current state of the law mandates that I make some allowance for the interest expense in my view I am not bound to award full indemnity for the amount of interest charged to the Plaintiff. I am not bound by Basi v. Atwal and with the greatest of respect I decline to follow it. [74] In the law of costs it is still only in the relatively rare case that full indemnity is provided to the successful party. Only disbursements that are necessary and reasonable in amount are recoverable. [75] In my view the Registrar should endeavour, wherever possible, in assessing the amount to allow for a specific type of disbursement to strive for consistency unless the application of that principle would work a real hardship or unfairness in a particular case. To attain that consistency I will make an allowance for disbursement interest based upon Registrar’s rates with the calculation of the total amount to be akin to the calculation of interest payable on special damages pursuant to the relevant provisions of Court Order Interest Act.
For more on this topic you can click here to accessed my archived ‘interest on disbursement’ posts. This case is also worth reviewing for the Court’s comments at paragraphs 49-53 on ‘transcription fees‘ finding that this is a disbursement of convenience, not necessity, and therefore not allowable.
